V, Rhm v. V, Es also known as B, Es

FCMC 10499 / 2018

[2020] HKFC 263

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 10499 OF 2018

----------------------------

----------------------------

------------------------

RULING
(Costs following a judgment on a Crossley application)

-----------------------

Introduction

1.On the 1 November 2019 this court handed down a 34-page judgment following a four-day trial to determine an application by the Respondent wife that a consent summons dated the 4 May 2017 and subsequently amended on the 16 October 2017, be set aside. The wife was wholly successful in that application. This can be seen by the findings made at the end of the judgment where I stated inter alia as follows:

38. In conclusion it seems to me that this was a very poorly drafted document and one that would be almost impossible to enforce as it stands. Further it was clear that neither party fully understood the potential implications of many parts of it. 

Are there any grounds for concluding that an injustice would be done by holding the wife to the terms of the consent summonses? 

39. It does not seem to me that the Amended consent summons was entered into freely or with a full appreciation of its implications. In particular, it is clear that there had been a material lack of disclosure, especially with respect to the family expenses and that the wife did not receive full legal advice before signing either document. I specifically accept that she did not receive advice on the consent summonses themselves. Further, although I would accept that the pressure that she was subjected to did not amount to duress, nevertheless she was placed under inappropriate pressure during the negotiation process. I am also conscious of the fact that the wife’s emotional state at the time was a cause for some concern given H’s [the younger son’s] situation at the time including the fact that he was in and out of hospital on a regular basis, especially during the period that the first consent summons was negotiated and signed. Although the husband complains that the wife has used H’s condition unfairly, it nevertheless seems to me that this is a material factor to be taken into account. Ultimately I am also not convinced that the agreements are fair, although I am cognizant of the huge amount of money that has been spent on legal costs to date and the fact that if the husband comes up to proof on many aspects of the disclosure, that both parties will need to radically alter their lifestyles going forward.     

Conclusion

40. Having considered all of the above, it is ordered that both the original consent summons dated the 4 May 2017 and the Amended Consent summons dated the 16 October 2017 be set aside.  As rightly pointed out by Mr Pilbrow, this is not the sort of case that was anticipated in Crossley, where truncated Form E’s were filed and the parties proceeded to bypass many of the normal rules relating to disclosure etc.  Here it will be necessary for the parties to make full and frank disclosure of their financial situation and this is likely to go beyond the disclosure filed to date.  Form E’s were filed in August 2018.  Thus in the first instance it is further ordered that updated Form E’s shall be filed and exchanged within the next 42 days.  There shall also be a further First Appointment on the 7 February 2020 at 9:30 am.  I shall not order in the first instance that the parties do personally attend this hearing, although this will clearly become necessary as the case develops.

2.In such circumstances, the following order with respect to costs was both wholly appropriate and completely foreseeable.

Costs 

41. I can see no reason why costs shall not follow the event in the normal way.  Thus I shall make an order nisi to be made absolute in 28 days’ time that the Petitioner husband shall pay the Respondent wife’s costs on a party and party basis to be taxed if not agreed.  There shall be certificate for counsel.  

3.On the 22 November 2019 the husband filed a summons asking that this order be set aside. In his affidavit in support he states that a costs order against him at this stage would be premature as the court does not know what orders will be made on final ancillary relief. He further references extensive without prejudice communications, although none are produced for the purposes of this application. He also adds that he does not have the ability to pay.

The law

4.The relevant law is not in dispute and can be found at Order 62 RHC on costs. To summarize it is accepted that the issue of costs lies in the discretion of the court and that costs are normally expected to follow the event. This presumption is more easily displaced in family proceedings than in others. In exercising the courts discretion reference can also be made to a number of factors as set out in Order 62 r 5 including inter alia any without prejudice save as to costs letters and the litigation conduct of the parties. This states as follows:

(1)   The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account-

(aa)  the underlying objectives set out in Order 1A, rule 1;

(a)   any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b)   any payment of money into court and the amount of payment;

(c)   any written offer made under Order 33, rule 4A(2);

(d)   any written offer which is expressed to be "without prejudice save as to costs" and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e)    the conduct of all the parties;

(f)    whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g)   any admissible offer to settle made by a party, which is drawn to the Court's attention.

(2)   For the purpose of paragraph (1)(e), the conduct of the parties includes-

(a)   whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b)   the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c)   whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d)   conduct before, as well as during, the proceedings.

5.In this instance and as indicated above, it is of note that I have not been referred to any without prejudice/open letters of offer with respect to the Crossley application per se. It is also clear that the wife was wholly successful with respect to this part of the litigation. Further the issue of conduct was fully considered and dealt with in the body of the judgment. For the avoidance of doubt I accept that it was reasonable for the wife to raise this issue and to pursue it.  

Each party’s respective positions on costs

6.In the husband’s written submission, he asks that the costs for the Crossley trial be reserved, to be determined upon completion of the ancillary relief trial in March next year. The wife for her part asks that the costs order be made absolute, to be taxed forthwith. She does not ask that payment be made forthwith although I believe that this may be inferred.   

Discussion  

7.In short, although I have some sympathy with the situation that the husband finds himself in, I am not with him on this. I do not accept the arguments put forward by him. He says that the court can only make a further determination on the issue of costs when all of the evidence is before the court and I am able to fully assess all of the factors referred to in paragraph 4 above. But with respect the Crossley application was a discrete application. All of the relevant evidence has already been placed before the court and on that basis a determination has been made. In such circumstances it is not accepted that it would be appropriate to adjourn the issue of costs to the ancillary relief trial (which is due to be heard in March 2021). Similarly, it is not accepted that making a costs order is somehow “premature”. The wife was successful on the Crossley application. She may or may not be successful at the ancillary relief trial. Those two matters are distinct from each other and should not be dealt with at the same time. Lastly, the husband points out that a costs order may have an impact on the ultimate division of assets. That may be true. Consequently, it is important for the court to know what each party’s liability to costs is generally and specifically how much the husband owes to the wife with respect to this aspect of the case. Further, it is anticipated that the husband’s liability to pay these costs will ultimately come from his share of the asset pool – such as it may be. 

Decision

8.In such circumstances the husband’s summons dated the 22 November 2020 shall be dismissed with costs of that application to the wife. For the avoidance of doubt the order made on the 1 November 2019 namely that the Petitioner husband shall pay the Respondent wife’s costs of the Crossley application on a party and party basis to be taxed if not agreed, with certificate for counsel, shall be made absolute. The wife asks that the costs be taxed forthwith. I shall allow this. Either the costs should be taxed or agreement should be reached on the issue of costs and how much is owed to the wife in that regard. These figures should be available for the ancillary relief trial in March. The court does NOT however, order that these costs are to be paid forthwith.      

Ms. Mairead Rattigan and Ms. Madeleine Booth instructed by Messrs Oldham Li & Nie for the Petitioner

Messrs Tanner De Witt for the Respondent